Transforming fintech in the age of AI: Opportunities and challenges for the digital economy

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Transforming fintech in the age of AI: Opportunities and challenges for the digital economy

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This content is contributed or sourced from third parties but has been subject to Finextra editorial review.

Imagine an AI system detecting fraud in seconds, approving a microloan for a shopkeeper who has never qualified for credit, and guiding a customer through a conversation that feels almost human. This is not science fiction; it is fintech today. Generative AI is redesigning products once reserved for the few and transforming the very foundations of finance by lowering costs, accelerating transactions, and strengthening security. PwC estimates that AI-driven technologies could generate over USD $15.7 trillion globally by 2030, yet much of this value is concentrated in a handful of countries. The challenge, and the opportunity, is ensuring that AI fuels shared prosperity across the digital economy, rather than widening the global divide.

At Money 20/20, the global meeting point for finance and technology, I spoke about one of the most powerful transformations of our time: how AI is reshaping fintech and what it means for the digital economy we are building together.

AI is no longer a promise of tomorrow; it is here today. It is transforming the way we detect fraud, extend credit, and interact with digital assistants. Generative AI is pushing the frontier further, making products once exclusive to a few accessible to everyone. At the same time, AI is fundamentally changing the foundations of finance, cutting costs, speeding up processes, and strengthening security. The World Economic Forum emphasises that while AI is a critical driver of economic strength, developing nations must implement national AI strategies, align investments with strategic priorities, and foster international cooperation to harness its potential fully.

Yet AI is not just about technology or efficiency; it is about people. In Pakistan, a young entrepreneur built an AI-powered fintech platform that uses digital transaction and behavioral data to provide  microloans to shopkeepers, including those who had never qualified for formal credit before. A woman was able to receive an accessible loan, expand her business, and ensure her daughter’s education. This is what AI in fintech truly means: dignity, opportunity, and shared prosperity.

Alongside these opportunities come significant challenges. Biased data produces biased outcomes. Weak systems invite cyberattacks. Regulation lagging behind innovation erodes trust. And the hardest question remains: who is accountable when AI systems make mistakes? These are not theoretical concerns; they are urgent realities demanding thoughtful solutions.

AI systems are as fair as the data they are trained on. When data is incomplete or impacted by real-world biases, it could potentially lead to the amplification of biases embedded in the data. In financial services, this can translate into the exclusion of marginalized groups – such as women or rural entrepreneurs – simply due to of lack of historical data. Embedding human rights principles into AI system is essential to mitigate such risks and promote inclusion. 

Privacy is another critical frontier. AI systems often rely on vast amounts of personal data, raising risks across multiple dimensions, from behavioral profiling to surveillance through facial recognition, for instance. Without robust protections, AI can erode autonomy and trust – especially in sensitive sectors like finance, where data misuse can have life-altering consequences.

Compounding these challenges, regulation is struggling to keep pace with rapid technological advancements. While some countries have adopted sophisticated frameworks – like the EU’s AI Act – others are still evolving their digital laws. Strong data protection is a fundamental step towards building a responsible AI governance. As emphasized in the DCO’s Rights by Design report, international cooperation and culturally sensitive approaches are key to building frameworks that protect rights and foster innovation. 

Our mandate is clear: to ensure digital prosperity is inclusive, resilient, and shared. From 2025 to 2028, our agenda focuses on three pillars: building a thriving cross-border digital market that lowers barriers for startups and SMEs; promoting a data-driven economy that uses AI responsibly to guide innovation and policy; and creating a responsible digital economy anchored in ethics, trust, and security. Tools such as our AI Readiness Toolkit and Ethical AI Evaluator help governments and companies adopt AI with accountability and transparency.

To guide these efforts, we developed the Digital Economy Navigator (DEN), a people-centered framework assessing digital maturity across nations. Unlike traditional indices, DEN combines infrastructure data with the lived experiences of thousands of individuals, showing not only how businesses perform but also how societies are benefiting from digital tools.

We are committed to building bridges between digitally advanced and digitally rising nations, ensuring that no one is left behind, whether a farmer in Nigeria seeking microcredit, a woman in Jordan scaling her business, or a young entrepreneur in Cyprus wishing to trade across borders. With inclusive policies, ethical frameworks, and international cooperation, strategic investments in digital skills and infrastructure can deliver real impact for people everywhere.

If we get this right, AI will not divide, it will connect. It will not exclude, it will empower. The digital economy is no longer a luxury; it is the new foundation of shared prosperity. By working together, promoting ethics, investing in skills, and adopting responsible AI, we can ensure AI becomes a force for opportunity, dignity, and inclusion for all.

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Contributed

This content is contributed or sourced from third parties but has been subject to Finextra editorial review.